47 Mr S. M. Bruce, High Commissioner in London, to Mr R. G. Menzies, Prime Minister

Cablegram unnumbered LONDON, 6 February 1940, 5.36 p.m.

IMPORTANT SECRET

Meeting forecast in my telegram 17th January Bell [1] now held.

Eden [2] presided and present Treasury, Board of Trade, Ministry of Economic Warfare, Foreign Office and Essendon. [3] I referred to the understanding when Essendon appointed, that all questions relating to supplies to neutrals would be handled by him and Bradford control would be limited to handling wool retained to meet Military and civilian requirements in the United Kingdom and stated that this understanding had not been carried out in that before allocations for neutrals approved both in respect of quantities and price, reference had to be made to Bradford.

I urged that Bradford should now be confined to its agreed functions that the amount of wool necessary to retain to meet United Kingdom or Allied requirements should be determined and balance placed at the disposal of Essendon who would determine in consultation with the Board of Trade export requirements and in consultation with the Australian wool committee allocations to neutrals subject to overriding considerations of Economic Warfare.

With regard to Economic Warfare, I urged the closest co-operation between Essendon's Committee and the Department of Economic Warfare and that the Department should supply full information of the reasons for its decisions. On this point it was agreed that a memorandum should immediately be prepared giving the Department's views in detail with regard to supplies to Japan.

I also stressed the seriousness both from point of view of Australia and of the United Kingdom Treasury of accumulated supplies and the dangerous stimulus to substitutes by too high prices and urged that the determination of prices should be taken out of the hands of Bradford and be dealt with on a basis of high policy.

In the discussion which followed there was an agreement as to necessity of ascertaining immediately supplies available after meeting Allied requirements, avoiding accumulations, of maintaining reasonable prices and of close co-operation between the Departments concerned. I am not confident however that this agreement will be translated into really effective action. [4]

BRUCE

1 Chairman of the Central Wool Committee. There is a copy of Bruce's cablegram in series FA: A3195, 1.401.

2 U.K. Dominions Secretary.

3 Chairman of U.K. Committee for Sale of Empire Wool Abroad.

4 This cablegram was dispatched before Bruce received the cablegram from Menzies printed as Document 45. (See Bruce's unnumbered cablegram of 6 February 1940 on file AA: A1608, L37/1/5.)

[FA: A3195, 1.844]